As President Barack Obama heads to the Middle East to meet with Israeli Prime Minister Benjamin Netanyahu Wednesday, the two might consider a plan being advanced by a Jerusalem economic-policy think tank that would go a little way toward easing the massive debt burden facing the U.S., and somewhat paradoxically, could advance the cause of peace in the region.

Creative: A Jerusalem economics institute is advancing a plan to end military aid in the region, which it says will aid peace.
William Waitzman for Barron's

Corinne and Robert Sauer, founders of the Jerusalem Institute for Market Studies, have taken up a proposal put forth in 2003 by Erez Raphaeli, an independent researcher. He contended that ending the nearly $5 billion in annual U.S. military aid to Israel and Egypt, as well as to Jordan, Lebanon, and the Palestinians, would actually improve the military position of Israel, the U.S.'s strongest ally in the region, and limit an arms race that the Sauers, both free-market economists, argue is essentially spiraling out of control.

If the military aid, part of $7.1 billion in grants that the U.S. awards each year in the Middle East, were to be withdrawn, the Arab countries would have difficulty replacing it, and Israel thus could downsize its military, argues Robert Sauer, who is also an economics professor at Royal Holloway, a college of the University of London.

The $3.1 billion in annual U.S. military aid to Israel accounts for 18%-22% of that country's annual defense budget, and is set to continue until 2018. Although the plan is unlikely to be considered at this week's meeting, the idea has gotten support from at least one American—Republican Sen. Rand Paul of Kentucky.

A Bank of Japan governor retires, clearing the way for a monetary dove.

Pope Francis is officially installed.

Wednesday 20

The Fed is likely to issue a statement that is more bullish on the economy but to leave policy unchanged, says Blitz. He says it would be a mistake for the market to interpret economic strength as indicating an early end to the central bank's asset purchases. Investors should keep a close eye on Fed Chairman Ben Bernanke's news conference, where he might spell out what metrics he's focusing on in determining when to ease off the gas.